Investec Life, which provides high-end life insurance to Investec’s private banking clients, says the growing risk of so-called “long Covid” to the broader industry could result in premiums for income protection, disability and severe illness cover being hiked, as more clients infected by Covid-19 begin to report long-term debilitating effects from the virus.
Post-acute sequelae (PASC) of Covid-19, colloquially referred to as ‘long Covid’, are the effects of the virus that linger for weeks or months after the initial illness, which range from ongoing respiratory difficulty to chronic fatigue and cognitive impairment. Though no standard clinical definition of the syndrome exists, a recent study by Imperial College London showed that more than a third of people who have had Covid-19 experienced at least one ongoing symptom that lasted 12 weeks or more.
“For people who have got Covid-19, there’s growing evidence that those who have had it severely are suffering from what the world is calling ‘long-Covid’ symptoms,” Investec Life CEO Michael Goemans said in an interview. “A lot of the traditional players with big existing books whose clients have been heavily impacted by Covid-19 face uncertainty about the long-term impact of the virus on their client base and whether premiums are going to have to change. Those with younger healthier client bases are going to fare better.”
SA insurers including Old Mutual, Momentum Metropolitan, Santam and Sanlam have been forced to raise provisions for increased mortality and income protection claims due to the effect of Covid-19 since the onset of the pandemic. With President Cyril Ramaphosa having placed the entire country on Level 4 lockdown restrictions as of Monday due to a surging third-wave of infections, it seems inevitable that insurers will have to again increase provisions.
“At the moment insurers have had a lot of uncertainty around whether they’re going to have to set aside more provisions,” said Goemans. “Traditional insurers are also going to have a lot of uncertainty about whether they’re going to have to push up premium rates in future for clients who have had Covid-19 severely.”
Covid-19 claims thus far have largely fallen into one of two buckets: mortality and loss of income. However, Goemans says a third “non-life bucket” is likely to emerge for insurers with significant exposure to income protection, disability and severe illness claims as more people begin to suffer from the long-term effects of the virus.
Even so, Goemans does not believe Investec Life will be significantly affected by long Covid due to the company’s relatively young client base, which means fewer of its clients are exposed to the comorbidities that can worsen the effects of the virus.
“We don’t sit with a big rump of our book being older clients who were underwritten a long time ago and hence have had the time to develop a lot of the comorbidities and conditions that can put strain on other insurers, who will have average policy durations certainly longer than five years,” said Goemans.
Investec Life was launched from scratch in October 2017 and though Goemans declines to disclose its exact number of clients he says the unit’s total cover in force was at R15bn at end-March, which is 60% higher than the same time a year ago. He also says Investec Life has significant scope to grow within the bank’s private client base, which numbers approximately 80,000.
Investec Life has managed to continue growing throughout the pandemic, particularly among younger professionals, thanks to its business being heavily digitised and its ability to provide bespoke risk profiling and pricing tailored to individual needs. Though Goemans told Business Day in November 2020 that Investec Life’s longer-term ambition was to sign up at least 50% of Investec’s private banking clients, he did not preclude its offering being rolled out to the broader market, though it would remain focused on upper-income consumers.
“We want to maintain a private client experience so if we do go wider it won’t be to the mass market,” he says. “It really is critical to maintain the quality of our risk pool so we can continue to price attractively for our clients especially with this potential long-Covid risk.”
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